Retail sales inch up despite payroll tax hike

Retail sales inched higher in January, held in check by higher payroll taxes.

The Commerce Department said Wednesday that retail sales rose at a seasonally adjusted 0.1% last month compared to a gain of 0.5% in December, when holiday shopping boosted the number.

Retail sales figures can hint at how the economy is doing overall, since consumer spending accounts for 70% of economic activity. However, this measure of consumer spending is volatile month to month and often subject to major revisions.

Vehicle sales account for about 20% of retail sales and can distort overall trends in consumer spending.

For all of 2012, retail sales rose 4.4%, Commerce said.

In January, Commerce said, sales gains were stronger at department stores, online retailers and groceries. Sales gains were lower for auto dealerships, pharmacies and furniture and home-goods retailers, which was somewhat surprising given recent reports that show improving sales of existing and new homes. Generally, consumers buy more home goods and furniture when the housing market is strong.

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